Question

do you think free trade is really free? What are the likely costs of adopting a free trade regime? Do you think governments should play any role in reducing these costs? Why or Why not?

Answer 1

One of the most powerful ways of global economic integration is the free trade process. This scheme is generally defined on a contractual basis between countries with a high degree of trade and political as well as economic cooperation This scheme is used to eliminate tariffs as well as qualitative limitations in bilateral trade. Exemptions from the free trade process were likely for extra-sensitive goods.

Nonetheless, it also has its drawbacks, as appealing as the free trade system can appear. It has potential costs associated with the implementation of this system. Nevertheless, every nation's degree of value in the free trade zones is directly related to the nation's technological advancement. Free trade zones are regions without borders or trade restrictions. All members of these areas that make up the free trade zone allow free trade between them and introduce minimal, or no barriers or tariffs to trade in products, as well as services supplied from any nation within that region.

Once a nation adopts the free trade system, it opens up to fierce competition from other countries in the same free trade area. This is because the same product must compete for all nations. Notwithstanding rivalry, operating to the benefit of the customer leads to low profit margins for the firms as a result of increased product quality. This is because firms were forced to cut their prices in order to remain on the market. Reduced margins of income mean lower tax collection. Emerging companies may also face a challenge in entering a competitive environment that lacks government-led short-term protection plans, as put forward by the claim of the infant industry. In the face of competition from massive foreign companies, it is extremely challenging to build economies of scale. It refers to the markets and economies of children. Therefore, surviving in a free trade is extremely difficult for a weak economy as its industries can not expand.

The government must allow businesses to sell what they can manufacture at the lowest cost in order to reduce the cost of implementing a free trade regime. This will be a major development as the companies gain a competitive advantage that allows them to stay on the market for a long time The government can also promote the production of goods with a high relative advantage for the state. This will create the opportunity to manufacture at a lower cost and compete in the same free trade zone with other countries. The government can also exclude goods it thinks are vital to its economy. Those commodities are being sold in government terms.